9.5 What are the key issues?

Interests may be covert

As mentioned before stakeholder interests may be covert and
agendas partially hidden. It will be up to the municipality
to take note of these issues and deal with them diplomatically.

Objective analysis

The municipality might carry out the stakeholder analysis.
However, experience suggests that the objectivity of an
external party familiar with the context, but without a particular
agenda, would develop a more balanced assessment.

Capacity

Roles should be allocated according to capacity. The development
of PPPs assumes some capacity on the part of the private
sector. In general, capacity needs to be developed [see
Tool 21] to strengthen:

the capacity of the public sector to work in partnership
and to develop a strategic approach to the development of
the partnership at the outset;

the private sector in terms of its understanding of issues
relating to the poor;

civil society to work with the private sector; and communities
to understand their potential role in regulation.

Supporting organisations and donors

Ideally, sustainable local partnership works on overlapping
goals and mutual interests. In some cases, an external financial
and technical support is needed. Each municipality needs
to decide whether there is a need for donor involvement in
its PPP project.

Most often, the International Financial Institutions (IFIs) – also
known as multilateral development banks (MDB) – which are
multilateral lending institutions that provide resources
for development, play the role of supporting organisations on
PPPs.

These institutions or banks include, but are not limited
to: the Asian Development Bank (ADB) and Fund (ADF); the
African Development Bank (AFDB) and Fund (AFDF); the European
Bank for Reconstruction and Development (EBRD); the Inter-American
Development Bank (IADB); the International Bank for Reconstruction
and Development (IBRD, or the World Bank); the International
Finance Corporation (IFC); the International Development
Association (IDA); the Middle East Development Bank (MEDB);
and the North American Development Bank (NADB).

The bulk of IFI assistance is provided to the member governments
in the form of loans, but to varying degrees (as official
aid diminishes and the flow of private capital to developing
economies continue to grow) the IFIs also participate in
financing private initiatives.

Each IFI has its own guidelines and the municipality’s familiarisation
with them could be a good first step towards getting IFI support.
IFI can provide the following support:

developing capacity;

facilitating and financing demonstration projects; and

leveraging private finance.

The role of IFIs in private infrastructure investment has
three broad aspects:

provision of investment financing on terms not (yet) available
in the market or for sectors not yet considered
sufficiently mature for commercial financing; and

mitigation of political and regulatory risk.

Some of the disadvantages encountered in foreign funded projects
arise out of the dichotomy that exists between the “donors” and
the “recipients”, and/or between the “foreign
experts” (who are usually from countries of the North) and
their local counterparts. This may result in projects the goals,
aims, objectives and outputs of which are not relevant to – or
are out-of-step or even in conflict with – the actual
needs of the recipient. Hence a shift in the conception and
functions of such aid is needed.

The dichotomous relations mentioned above could be replaced
by partnerships, in which donors work very closely and
with considerable understanding and empathy with their local
counterparts on a common agenda geared towards national goals
and aspirations. Needless to say, if donors have their own
agenda, which the recipients are expected to accommodate,
little is achieved in the long run.

Lack of common understanding may cause problems, such as
with the issue of sustainability both in terms of budgetary
constraints and availability of competent manpower. Difficulties
governments face include meeting the conditions and demands
attached to aid agreements (donors dictating terms to the
government, for instance) and the failure of donors to
provide the high-quality expertise and technical assistance
expected. Instances of foreign experts trying to sell their
aid “package” developed during
some previous assignment, irrespective of its validity and relevance
for another situation, are not uncommon.

Outputs
<– Summary stakeholder analysis
<– In-depth profiles
<– Overview of potential roles –
including who would be involved in the
delivery process to the poor